FBI Examines Huang Allegations as Nvidia Board Hands Probe to Wachtell and Shareholders Sue
Nvidia shares fell for a second straight day on Tuesday, dropping 5.47 percent to $168.89, as new developments piled onto the board investigation, an FBI review confirmed by the president, a shareholder class action and the hiring of an outside law firm.
The decline has been steep for two days. The shares closed at $186.64 on Friday, fell 4.27 percent to $178.67 on Monday and dropped to $168.89 on Tuesday, a fall of 9.5 percent in two sessions. About $190 billion in market value evaporated on Monday alone. From the intraday high of $243.37 on Oct. 6, the stock is down more than 30 percent, and market value has shrunk from a peak of about $5.78 trillion to about $4.04 trillion as of midday Tuesday.
The story began with a New York Times report in October that Huang had a close relationship with Alice Huang, a former executive at Megaspeed, a Singapore cloud company, and that U.S. authorities had concluded she was a Chinese intelligence asset. Megaspeed bought $4.8 billion of Nvidia chips in two years and is under U.S. investigation over allegations it helped Beijing gain access to export-barred AI chips. Huang admitted in a message to employees on Nov. 8 that he had been unfaithful to his wife and apologized. The same day the board announced an independent investigation by a committee of independent directors with outside counsel, saying it had no reason to believe national security or Nvidia secrets had been compromised.
President Donald Trump said at a White House briefing on Nov. 9 that the FBI was examining the allegations. He said he had spoken directly with Huang and asked whether he knew of the woman’s alleged intelligence links, and that Huang told him he did not know. Trump also described Huang as a very honorable man. Trump had earlier said he had not spoken with Huang since the announcement, and the exact sequence of the two accounts is not clear.
Shareholders went to court. Five minutes after the market closed on Nov. 9, the Rosen Law Firm filed a class action in federal court in San Jose. The case is Kistenmacher v. NVIDIA, case number 5:26-cv-13448. The lead plaintiff is retail investor Mark Kistenmacher, and the class period runs from Oct. 9, 2025 to Nov. 8, 2026. The suit is about disclosure, not espionage. It claims Huang and the company concealed the relationship and made false or misleading statements, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act and Rule 10b-5. Damages are unspecified, there is no court finding, and the class has not been certified. Motions for lead plaintiff are due Jan. 8, 2027. At least five law firms have opened parallel investigations.
The board’s independence is also under scrutiny. A Reuters analysis on Nov. 10 noted that the board has 11 directors and no chair, that only two joined since 2021, and that most have worked alongside Huang for decades. Huang owns 3.6 percent of the stock, and there is no obvious successor. Ann Lipton, a law professor at the University of Colorado, questioned whether a board with such long ties to Huang could investigate him independently.
The board has handed the investigation to an outside firm. CNBC and Bloomberg Law reported that the independent directors gave the review to Wachtell, Lipton, Rosen and Katz, with former acting U.S. Attorney Joon H. Kim leading it. The mandate covers Huang’s relationship and the potential exposure of trade secrets or national security interests.
Analysts have cut price targets in a row. Wells Fargo lowered its target to $300 from $315 while keeping an Overweight rating, and Citi cut its target to $285 from $315 while keeping a Buy rating. Mizuho cut its target to $250. Bank of America removed Nvidia from its highest-conviction U.S. 1 List but kept a Buy rating and a $350 target. Aletheia Capital downgraded the stock to Hold from Buy a day earlier and dropped its $340 target. Wall Street’s overall consensus remains Strong Buy, with an average target of about $327.83.
The slide is specific to Nvidia. On Monday the Nasdaq rose 2.74 percent and the PHLX Semiconductor index jumped 7 percent while Nvidia fell 4.27 percent. On Tuesday the semiconductor index held nearly flat and Broadcom rose 3.91 percent while Nvidia fell another 5.47 percent. The broader market also fell Tuesday on hot inflation data, but Nvidia’s drop was far larger.
China’s Foreign Ministry dismissed the allegations as groundless smears. No evidence has been made public that Huang knowingly took part in intelligence activity, and no one has been charged.
The calendar ahead is crowded. Nvidia reports third-quarter earnings on Nov. 17, with the market expecting earnings per share of $2.47 and revenue of $108.8 billion. On Nov. 18 Huang attends a closed House briefing requested by the chairmen of the Foreign Affairs Committee, the select committee on China and the Intelligence Committee. Motions for lead plaintiff in the class action are due Jan. 8, 2027
